Do you know who’s watching?

It’s called deep-packet inspection. Congress wonders if it’s plain-old spying. Basically, it’s when web companies track their customers’ visits online and use the information to tailor Internet advertisements for them.

Congress was worried about it enough to begin questioning some of the biggest Internet companies about the practice this month. And guess what? It seems some web companies are indeed using targeting without informing their customers.

The Washington Post writes that the revelations come from letters released by the House Energy and Commerce Committee.

“Google, in its letter… stressed that it did not engage in potentially the most invasive of technologies — deep-packet inspection, which companies such as NebuAd have tested with some broadband providers. But Google did note that it had begun to use across its network the ‘DoubleClick ad-serving cookie,’ a computer code that allows the tracking of Web surfing.

Alan Davidson, Google’s director of public policy and government affairs, stated in the letter that users could opt out of a single cookie for both DoubleClick and the Google content network. He also said that Google was not yet focusing on ‘behavioral’ advertising, which depends on Web site tracking.”

Nevertheless, the Washington Post points out, Google trumpeted on its blog last week its ability to provide insight into things like the number of users who have seen an advertising campaign or how many users have visited a particular site after seeing an ad.

Here’s more from the article:

“Google is slowly embracing a full-blown behavioral targeting over its vast network of services and sites,” said Jeffrey Chester, executive director of the Center for Digital Democracy. He said that Google, through its vast data collection and sophisticated data analysis tools, “knows more about consumers than practically anyone.”

Examining Google is just the beginning.

Keep an eye on:

Single-copy sales of magazines dropped 6.3 percent, hurt by sharp declines for gossip and fashion publications, according to data from the Audit Bureau of Circulations (NY Post)

Rolling Stone magazine unveiled plans for a major design overhaul, scaling down its signature large-format pages to a standard magazine size in a bid to bolster advertising and sagging newsstand sales (Reuters)

This is the first summer since 1997 that Fox hasn’t had a $100-million box-office hit (LA Times)

Major media companies are split over whether to release movies through video-on-demand on the same day that DVDs go on sale (NY Post)